Lactalis McLelland agrees early resolution in dairy retail price initiatives investigation

22/08 15 February 2008

The OFT has agreed an early resolution with Lactalis McLelland following the OFT's Statement of Objections ('SO') of 20 September 2007 which provisionally found evidence of collusion between certain supermarkets and dairy processors on the retail prices of certain dairy products.

Lactalis McLelland is the company formed by the acquisition of A McLelland and Son Limited by Groupe Lactalis in September 2004, and the alleged anti-competitive conduct set out in the SO was carried out by A McLelland and Son Limited before this acquisition. Lactalis McLelland has admitted the involvement of A McLelland and Son Limited in the alleged anti-competitive practices in relation to retail prices of cheese in 2002 and 2003, and as a result has agreed to pay a penalty.

A number of the parties under investigation have admitted their involvement in certain of the alleged anti-competitive practices identified in the SO and have agreed to pay individual penalties. Lactalis McLelland and the other parties with whom the OFT has reached an early resolution will receive a significant reduction in the financial penalty that could otherwise have been imposed, on condition that they continue to provide full cooperation. Combined, the financial penalties agreed by these parties before taking into account any reduction for early resolution, come to a maximum of over £120 million.

The OFT is very pleased that the constructive cooperation of Lactalis McLelland has enabled the case alleged against it to be resolved effectively and swiftly.

The investigation against the remaining parties, Morrisons and Tesco, is continuing. The OFT will carefully consider these parties' representations on the provisional findings, and the evidence in the case as a whole before reaching any final decision.

NOTES

1. On 20 September 2007, the OFT issued a Statement of Objections, setting out its provisional findings to: Arla, Asda, The Cheese Company, Dairy Crest, Lactalis McLelland (in relation to conduct by A McLelland and Son Limited prior to its acquisition by Groupe Lactalis), Morrisons, Safeway, Sainsbury's, Tesco and Wiseman. See press release 170/07 for details.

2. On 7 December 2007 the OFT announced reaching early resolution with Asda, Dairy Crest, Safeway (in relation to conduct prior to its acquisition by Morrisons), Sainsbury's, The Cheese Company and Wiseman.

3. Lactalis McLelland (formerly A McLelland and Son Limited) is alleged to have facilitated the exchange of commercially sensitive information between certain retailers in respect of the retail price of UK produced cheese in both 2002 and 2003.

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